Will our internet bill explode?

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French Supreme Court rules that Internet Service Providers shall bear costs of the fight against online piracy. At the beginning of the summer, the French Supreme Court ruled that Internet Service Providers shall bear the costs of injunctions aiming to prevent copyright counterfeit committed by third parties, notably on the grounds that right holders are suffering from a fragile economic situation due to massive online counterfeit.

Facts of the case

The case concerns a dispute between French unions defending film producers and distributors and both the main French Internet Access Providers (SFR, Numericable, Free, Bouygues, Darty and Orange) and search engines  (Google, Microsoft, Yahoo!, Orange). The right holders’ unions had requested blocking and delisting injunctions against Alloshare websites, which offer unauthorized downloading and streaming of protected content. They further requested for the costs implied by such measures to be fully borne by the intermediaries. Unlike the Court of first instance, the Paris Court of Appeal had granted both requests on 15 March 2016.

Background

In view to put an end to online copyright infringements, article 8.3 of  the 2001/29 InfoSoc Directive  provides for the possibility for copyright holders to apply  for an injunctions against intermediaries whose services are used by third parties to infringe their rights.  It’s on the basis of this provision, and its implementation into local laws, that copyright holders were enabled to request IAPs to prevent access to counterfeiting websites. Such injunctions have flourished throughout Europe ( see notably, https://www.droit-technologie.org/actualites/plateforme-pirate-bay-coupable-de-contrefacon-meme-titre-utilisateurs/).

These injunctions have for specificity that they do not rely on any liability of the service provider regarding the counterfeit but on the mere assumption that it is the best placed to put end to online infringement.

Even though the conditions to be met and the procedure to be followed in the frame of such injunctions are a matter for national law, the Court of Justice of the European Union (“CJEU”) has already ruled:

  • With its Scarlet case, that injunctions must be fair, proportionate and not be excessively costly, in compliance with article 3 of the 2004/48 IPR Enforcement and must furthermore comply with fundamental rights, and notably the ISPs’ right to conduct business and the customer’s freedom to receive or impart information.
  • With its UPC-Telekabel Wien case, that are admissible, notably regarding the necessary balance between fundamental rights at stake, injunctions prohibiting an IAP  from allowing access to a website offering illegal content, without specifying the measures to be implemented, and when that IAP can avoid incurring coercive penalties for breach of the injunction by showing that it has taken all reasonable measures, provided that (i)  internet users are not unnecessarily deprived of the possibility of lawfully accessing the information available and (ii) the measures at least have the effect  making it difficult to achieve and of seriously discouraging counterfeit.

In a nutshell, the CJEU considered that ISPs had to cooperate in the battle against counterfeit, with the limit that it cannot be required to make “unbearable sacrifices”.

The Supreme Court’s ruling: no unbearable sacrifice

The question of the costs was the main issue at stake here.

ISPs mainly claimed that, in the absence of any liability in the counterfeit, they cannot be forced to bear the costs related to the fight against such counterfeit. Their purpose is net neutrality,  not fight against counterfeit. Bearing costs of injunctions would furthermore restrict their fundamental right to conduct business.

In its ruling of 6 July 2017, the Supreme Court did not follow their position and ruled that costs could indeed be borne in full by ISPs.

It reasoned as follows:

  • Neither the 2001/29 InfoSoc Directive or the 2000/31 e-Commerce Directive which grants liability safe harbors to online intermediaries, prevent from attributing all costs to intermediaries and this “despite their absence of liability in principle”. ISPs are bond to contribute to the fight against piracy;
  • Based on this and on the CJUE’s UPC-Telekabel Wien case , it is only in the hypothesis where a specific measure might prove disproportionate, in consideration of its complexity, its cost and in its duration, that it compromises, with time, the viability of the economic model of technical intermediaries, that it would be advisable to appreciate the necessity of attributing the costs, in whole or in part, to the rightholders”.

In practice : “in the application of the concrete balance of rights, the Court of Appeal stressed, on the one hand, that the financial situation of the unions, already threatened by the infringements, could only be aggravated by costs beyond their control, and assessed, on the other hand, that neither IAPs nor the search engines demonstrated that the implementation of the measures would represent an unbearable sacrifice, or that their costs would endanger their economic viability ; as such, the Court of Appeal was able to conclude that attributing the costs of blocking and delisting injunctions to intermediaries was strictly necessary to the safeguard of the rights at stake”.

Pandora’s box?

So far, costs of injunctions were traditionally borne by the plaintiffs. Such a ruling undoubtedly paves the way for the multiplication of injunctions, at the expense of intermediaries. We shall see if other European jurisdictions follow the same path.

The question of the costs is far from trivial.

First because, it is complicated to justify attributing costs of the fight against piracy to intermediaries, whilst simultaneously providing such actors with a liability safe harbor. If one can understand the political will to balance the distribute of revenue between content creators and intermediaries, which indirectly benefit from the (whether legal or not) exploitation of musical and audiovisual content, can we approve imposing, by judicial means, the costs of the war against piracy on online intermediaries, who, again, are not themselves liable for acts of online piracy?

Next, because the costs at stake are far from negligible. Measures aiming to effectively prevent unauthorized access to protected content- and therefore the human and financial resources allocated-   can turn out to be quite consistent not only because of the number of websites concerned but because of the true difficulty to effectively prevent access to unauthorize websites, due to the resilience and adaptability of pirates.  For this reason, injunctions generally include an ongoing obligation to find and implement the most efficient blocking measures but also the obligation to prevent access to any sites created in replacement of the sites initially concerned  by the blocking. It’s a never-ending task.

It must moreover be kept in mind that ISPs are subject to a indefinite number of injunctions… from an indefinite number of rightholders.  With the risk that the massive combination of injunctions might indeed amount… to an “unbearable sacrifice” for the ISPs.

In this regard, it is for the less surprising to note importance given by the Courts to the financial situation of the rights holders – or their representatives-  in the solution granted. Should the application of the rule of law – and here copyright principles, not remain independent from economic (alleged) reality?

One can however already fear that the price of the battle against online piracy will be reflected on your Internet bill…

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